Valuentum Exclusive Analysis for the Discerning Investor

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Nov 17, 2020

Walmart’s Digital Strategy Continues to Pay Off
Image Shown: Walmart Inc continues to distribute its free cash flows back to shareholders via dividends and share repurchases. The retailing giant’s management team has a long track record of being shareholders friendly. However, we still view shares of WMT as generously valued as of this writing, given that the top end of our fair value estimate range sits at $133 per share though WMT is currently trading closer to ~$150 per share. Image Source: Walmart Inc – Third Quarter of Fiscal 2021 IR Earnings Presentation. On November 17, Walmart reported third quarter earnings for fiscal 2021 (period ended October 31, 2020) that beat consensus estimates on both the top- and bottom-lines. As we have noted in the past, the key driver behind Walmart’s financial outperformance of late has been its e-commerce operations. Whether that be to support home delivery services or curbside pick-up options, Walmart’s past digital investments better allowed the retailing giant to meet surging demand for consumer staples and other products in the wake of the ongoing coronavirus (‘COVID-19’) pandemic. The top end of our fair value estimate range sits at $133 per share of WMT, indicating Walmart is generously valued as of this writing as its shares are currently trading near $150. However, we still view Walmart’s business model as stellar and its cash flow profile as impressive. During the first nine months of fiscal 2021, Walmart generated over $16.4 billion in free cash flow. The firm spent $4.6 billion covering its dividend obligations and another $1.2 billion buying back its stock during this period, and both of these activities were fully covered by Walmart’s free cash flows and then some. Shares of WMT yield ~1.4% as of this writing.

Sep 27, 2020

Costco Closes Out Fiscal 2020
Image Shown: Shares of Costco Wholesale Corporation have been on an upswing over the past five years. The ongoing coronavirus (‘COVID-19’) pandemic has upended daily activities and encouraged households worldwide to stockpile consumer staples products. When Costco Wholesale Corp reported its fourth quarter fiscal 2020 earnings (16-week period ended August 31, 2020) on September 24, management noted that Costco’s worldwide foot traffic was down ~1% year-over-year last fiscal quarter though its average basket size was up ~13% year-over-year during this period. Households are apparently making the most out of every shopping trip in order to socially distance. Costco’s ancillary businesses, like its in-store opticians and food courts operations, were hurt by temporary closures last fiscal quarter, though its core business held up very well. Costco’s gas business took a hit from reduced travel demand, though its membership renewal rates were broadly flat versus the same period a year ago last fiscal quarter.

Sep 8, 2020

Macy’s Is Treading Water for Now
Image Shown: Shares of Macy’s Inc have flatlined since crashing during the first three months of calendar year 2020 as investors await signs of the embattled retailer’s turnaround strategy taking hold. On September 2, embattled retailer Macy’s reported second quarter fiscal 2020 earnings (period ended August 1, 2020) that saw the firm’s comparable sales drop 34.7% year-over-year at stores owned by Macy’s due primarily to physical store closures brought on by the ongoing coronavirus (‘COVID-19’) pandemic. The year-over-year decline in comparable sales deepened to 35.1% when including stores owned and licensed by Macy’s. Digital sales offered some reprieve as those were up 53% year-over-year last fiscal quarter, with digital sales as a percentage of the retailer’s total sales at its owned stores coming in at 54%.

Sep 3, 2020

3 Lessons in Portfolio Management Over 10 Years
Image Source: http://www.epictop10.com/. "When I left as director in the equity and credit department at Morningstar in 2011, I thought I knew a whole heck of a lot about investing. I felt like I was one in the top 5-10 in the world as it relates to the category of practical knowledge of enterprise valuation (maybe include Koller at McKinsey, Mauboussin at Counterpoint, and Damadoran at Stern on this list). After all, I oversaw the valuation infrastructure of a department that used the process extensively, and the firm was among just a few that used enterprise valuation systematically. Then, at Valuentum, our small team would go on to build/update 20,000+ more enterprise valuation models. There can always be someone else out there, of course, but I don't think anybody has worked within the DCF model as much as I have across so many different companies. That said, through the past near-10 years managing Valuentum's simulated newsletter portfolios, I've also learned a number of things to become an even better portfolio manager." -- Brian Nelson, CFA

Sep 3, 2020

Update: Frequently Asked Questions About Valuentum Securities, Inc.
Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports and dividend reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information. We address a number of questions from both subscribers and visitors to our site.

Sep 1, 2020

Valuentum Website Overview
Overview of the key features of www.valuentum.com (03:55). Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports, dividend reports, and ETF reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information.

Aug 24, 2020

Target Posts Stellar Comparable Store Growth, Digital Investments Lead the Way
Image Source: Target Corporation – May 2013 IR Presentation. Elevated demand for consumers staples products and rebounding consumer discretionary sales helped Target Corp report record comparable store sales growth in the second quarter of fiscal 2020 (period ended August 1, 2020), which were up 24.3% year-over-year. Digital comparable sales were up a whopping 195% year-over-year as same-day delivery services grew by 273%, with Target citing strength at its curbside pickup, order online/pickup in-store and home delivery options. Please note Target generates virtually all of its revenues in the US.

Aug 12, 2020

Amazon Secures Big Win in the Online Grocery Market
Image Shown: Shares of Amazon have surged over the past year. Compared to their March 2020 lows, shares of AMZN have almost doubled as of this writing on August 10, 2020. On July 30, Amazon reported second-quarter earnings for 2020 that beat consensus top- and bottom-line estimates by a mile. As of this writing, shares of AMZN have almost doubled since hitting their March 2020 lows as Amazon’s lines of business were well-prepared to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic, assisted by the firm’s pristine balance sheet.

Jul 20, 2020

Walgreens Targets Cost Cuts and In-Store Doctors’ Offices
Image Source: Walgreens Boots Alliance Inc – Third Quarter Fiscal 2020 IR Earnings Presentation. On July 9, Walgreens Boots Alliance reported its third-quarter fiscal 2020 earnings (period ended May 31, 2020) and raised its dividend by ~2% on a sequential basis. Walgreens has increased its annual dividend over the past 45 consecutive years, earning it Dividend Aristocrat status, though we caution its net debt load weighs negatively on its forward-looking dividend coverage. Shares of WBA yield ~4.6% as of this writing.

Jul 14, 2020

Levi Strauss Skips Dividend Payment
Image Shown: An overview of Levi Strauss & Co.’s historical financials and operational footprint. As you can see, most of Levi Strauss’ sales are conducted through its wholesale segment. The company’s own e-commerce sales channel has historically represented just a small part of Levi Strauss’ total net revenues. Image Source: Levi Strauss & Co. – December 2019 Investor Presentation. On June 7, Levi Strauss & Co. reported second-quarter fiscal 2020 earnings (period ended May 24, 2020) that missed consensus estimates on both the top- and bottom-line. The apparel retailer noted it would reduce its “non-retail, non-manufacturing workforce” headcount by 700 employees to save an annualized $0.1 billion on corporate overhead as the ongoing coronavirus (‘COVID-19’) pandemic has devasted its financial performance. Levi Strauss touted its recent successes in the e-commerce arena but investors still sold off the name in the following days as the firm opted to skip an upcoming dividend payment (and likely due to growing fears over how a second wave of COVID-19 infections in the US and elsewhere would impact the company’s future financial performance).